A social enterprise is broadly understood as an organisation that seeks to address social issues using sustainable business models. It is involved in trading activities, with profit always or mainly reinvested into the enterprise. converges social and profit missions to create social value; and is impact-, rather than profit-driven. There are several models for a social enterprise. This article covers six social enterprise models with examples of each.
1. Employment models
Employment models are social enterprises that have been set up specifically in order to employ certain individuals or groups of individuals who are otherwise disadvantaged or who would struggle to enter the job market.
Example of the employment model
Deaf Hands @ Work is a social enterprise in South Africa whose main business activity is in construction, maintenance and renovation of new and existing residential homes with a focus on structural timber homes.
Deaf Hands @ Work exists so that it can provide employment opportunities to skilled and unskilled deaf and disabled people, thereby increasing their sense of self-worth and quality of life. It is also a powerful way to raise awareness about deaf people and the value of diversity in our society.
Read more in this case study on Deaf Hands @ Work by the Social Enterprise Academy.
2. Fee for service
Fee for Service social enterprises sell products that are socially and/or environmentally useful. Often these social enterprises have innovated to provide goods or services at a much cheaper price in order to be accessible to people at the base of the pyramid.
Example of the fee for service model
Jacaranda Health has transformed maternity care in Kenya by building private maternity clinics in peri-urban areas, innovating to provide patient-centred care that combines quality and affordability. Jacaranda Health is a social enterprise who provides comprehensive maternity care at a fifth of the cost of other private hospitals.
SOURCE: © SOCIAL ENTERPRISE ACADEMY 2017. USED WITH PERMISSION.
3. Cross subsidisation
Social enterprises who are selling products (goods and services) usually unrelated to their social mission follow a model of cross subsidisation. They use the profits to subsidise social programmes run by them, or give the profits to another charity/NGO. One for One models are also examples of cross subsidisation (where a customer buys a product and another is donated to a person who can’t afford to pay).
Example of the cross subsidisation model
MsMissMrs sells “Empowerment Pants”, their very own brand of superheroine underwear, trademarked and designed in Glasgow, Scotland. They are a gift item that are mainly bought online at their gift shop.
The profits from the sales of the pants is then used to fund an educational development programme known as the S.E.T. (Self-Esteem Tools) to women and girls who are building or rebuilding self-esteem and self-awareness, after experiencing extreme difficulties.
- Further reading: Investing in Cross-Subsidy for Greater Impact (SSIR)
4. Entrepreneur support
These are social enterprises that have been set up to support entrepreneurs so they are better able to service their markets.
Examples of entrepreneur support as a social enterprise model
The Clothing Bank in South Africa supports unemployed mothers to set up their own businesses selling clothes in their communities. The Clothing Bank provides training and support on sales skills, budgeting and lifeskills. In addition it sells clothes at a cheap price to the women who then fix these where required and sell them at a price determined by the women themselves. The clothes have been donated from major retailers across South Africa.
Read more in this case study on The Clothing Bank by the Social Enterprise Academy.
5. Market intermediaries
Social enterprises can also be set up to be a market linkage or market intermediary for entrepreneurs.
Examples
Chetna Organic in India is a co-operative with 35,000 members working with small and marginal farmers towards improving their livelihood options and making farming a sustainable and profitable occupation.
Chetna Organic is a market intermediary and has major clients in Europe, Asia and the USA. These major clients are interested in buying from Chetna Organic because of the quantity Chetna can guarantee due to its overall membership size. Individually these farmers would be unable to sell their cotton on the international market. Chetna works to fair-trade principles whereby a fair wage is insured.
Chetna Organic’s focus has been on farmer empowerment and the development of entrepreneurial skill. Some of Chetna Organic’s key programmes include promotion of organic farming, participative research on best practice for different agro-climatic conditions, seed trials to improve productivity and marketability of farmer’s produce and seed multiplication programs to reduce input dependency.
SOURCE: © SOCIAL ENTERPRISE ACADEMY 2017. USED WITH PERMISSION.
6. Social franchise model
Social franchises include a training and skills development component, as well as an income generation and enterprise development component.
Example of a social franchise
Ground Up is an example of a social franchise model of social enterprise.
In 2014, Learn to Earn (LtE) celebrated 25 years of serving the unemployed through skills training while facilitating the restoration of dignity and self-respect. To commemorate our past achievements, in which we average a 79% success rate of unemployed persons become economically active, we marked the occasion by launching a new training initiative.
Coffee is one of the most traded commodities in the world and is one of the fastest growing sectors in the South African economy. With this in mind LtE established the Ground Up Barista Academy, where unemployed people are trained and developed for the burgeoning coffee industry. All training is done in line with LtE’s approach to holistic human development – social, economic, emotional and spiritual.
Ground Up is made of the training division, Ground Up Barista Academy and then an income generating division, Ground Up Mobile.
To continue learning about social enterprises, read:
Or learn more about other forms of entrepreneur and small business support.
